Nasdaq 100 Retreats, Hold Seng Could Fall on Escalating US-China Tensions

Nasdaq 100, Hold Seng, ASX 200 INDEX OUTLOOK:

• Dow Jones, S&P 500 and Nasdaq 100 closed -0.07%, -0.36%, and -1.07% respectively
• The US Greenback rebounded, reflecting rising fears about Fed tapering bond purchases
• President Joe Biden signed an government order to banUS entities from investing in an expanded checklist of Chinese language firms, weighing on the Hold Seng Index (HSI)

ADP, US Greenback, US-China Rigidity, Nonfarm, Asia-Pacific at Open:

Wall Avenue shares retreated on Thursday, dragged by the expertise sector as fears about Fed tapering bond purchases equipped after a strong ADP personal payrolls report. The personal sector added 978okay jobs in Could, hitting an eleven-month excessive and in addition smashing the baseline forecast of a 650okay enhance (chart under). The tempo of job creating seems to have accelerated over the previous three months, underscoring a powerful financial restoration. In the meantime, weekly jobless claims fell to a contemporary pandemic low of 385okay, versus a 390okay forecast.

The strong knowledge hinted that tonight’s nonfarm payrolls knowledge could ship optimistic surprises, strengthening the prospect of Fed tapering. This got here a day after Philadelphia Fed President Patrick Harker stated it’s applicable “to slowly, rigorously transfer again” on bond purchases at an applicable time.

The market is certainly involved about it. The DXY US Greenback index rebounded 0.65% to 90.49 in a single day, and 10-year Treasury yields climbed to 1.625%. A stronger US Greenback sank gold costs and should weigh on commodities normally. Crude oil costs paused a rally and retreated from a two-and-half 12 months excessive.

US ADP Employment Change – Could 2021

Supply: Bloomberg, DailyFX

Threat urge for food tilted in the direction of the cautious facet for equities, with defensive sectors outperforming cyclical ones in a single day. The risk-off sentiment may carry into the Asia-Pacific buying and selling at the moment, particularly for the Higher China area. Futures in Japan, mainland China, Hong Kong, Taiwan, Singapore, Malaysia and India are within the purple, whereas these in Australia and South Korea are within the inexperienced.

President Joe Biden signed an government order on Thursday that bans US entities from investing in a widened checklist of 59 Chinese language firms with alleged ties to protection or surveillance expertise sectors. This transfer dangers reigniting US-China rigidity, and should spook panic promoting in these uncovered firms.

In consequence, Hong Kong’s Hold Seng Index (HSI) retreated 1.13% on Thursday. Selling appears set to hold on into the weekend, particularly among the many protection and surveillance expertise sectors.

Trying forward, merchants will preserve an in depth eye on Friday’s nonfarm payrolls knowledge for clues about job market improvement and its ramifications for the Fed’s coverage outlook. The determine is predicted to return in at 650okay, a giant soar from earlier month’s studying of 266okay. Issues about tapering renders the market weak to heightened volatility if precise numbers deviate too removed from baseline forecasts. Discover out extra from theDailyFX calendar.

Trying again to Thursday’s shut, 6 out of 11 S&P 500 sectors ended decrease, with 52.1% of the index’s constituents closing within the purple. Defensive-oriented utilities (+0.52%), client staples (+0.51%) and healthcare (+0.39%) outperformed, whereas client discretionary (-1.22%) and data expertise (- 0.91%) have been trailing.

S&P 500 Index Sector Efficiency 06-04-2021

Supply: Bloomberg, DailyFX

Nasdaq 100 Index Technical Evaluation

The Nasdaq 100 index reversed decrease this week, forming a “decrease excessive” on the every day chart. This means that near-term development could also be reversing and additional consolidation is probably going. An instantaneous assist degree could be discovered at 13,430 (the 161.8% extension), whereas a key resistance stays to be 14,000 (200% Fibonacci extension). The MACD indicator is about to kind a bearish crossover, suggesting that upward momentum is fading.

Nasdaq 100 Index – Every day Chart

Hold Seng Index Technical Evaluation:

The Hold Seng Index (HSI) didn’t breach the “neckline” of the “Double Backside” chart sample shaped since early March and retreated to the 100-day SMA line searching for near-term assist. An instantaneous resistance degree stays to be 29,350 – the 50% Fibonacci retracement. Breaching under a near-term assist of 28,920 could open the door for additional losses with an eye fixed on 28,300 – the 78.6% Fibonacci retracement.

Hold Seng Index – Every day Chart

ASX 200 Index Technical Evaluation:

The ASX 200 index hit an all-time excessive of seven,260 and breached above the 127.2% Fibonacci extension degree. Current surge in costs pulled the RSI oscillator near the overbought territory, rendering it weak to a technical pullback. The MACD indicator shaped a bullish crossover and trended larger, suggesting that bullish momentum could also be dominating.

ASX 200 Index – Every day Chart

— Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Feedback part under or @margaretyjy on Twitter